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Which of the following statements is/are correct: Beta accounts for the risk of the securities portfolio for a diversified investor Market rate of return accounts for the risk of the securities portfolio for a marginal investor Equity risk premium is the incremental return expected by a marginal investor from a specific equity instrument to be added into his/her portfolio of securities. Risk-free rate used in CAPM can be a short-term or long-term rate depending on the tenor of the equity instrument Group of answer choices Statements 2 and 3 are

Which of the following statements is/are correct: Beta accounts for the risk of the securities portfolio for a diversified investor Market rate of return accounts for the risk of the securities portfolio for a marginal investor Equity risk premium is the incremental return expected by a marginal investor from a specific equity instrument to be added into his/her portfolio of securities. Risk-free rate used in CAPM can be a short-term or long-term rate depending on the tenor of the equity instrument Group of answer choices Statements 2 and 3 are

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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2. Which of the following statements is/are correct:

  1. Beta accounts for the risk of the securities portfolio for a diversified investor
  2. Market rate of return accounts for the risk of the securities portfolio for a marginal investor
  3. Equity risk premium is the incremental return expected by a marginal investor from a specific equity instrument to be added into his/her portfolio of securities.
  4. Risk-free rate used in CAPM can be a short-term or long-term rate depending on the tenor of the equity instrument
Group of answer choices
Statements 2 and 3 are correct
Statement 2 only
Statements 1, 2 and 3 are correct
All statements are correct
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